The country's largest lender State Bank of India today said it plans to raise $5 billion through offshore loans by December.
"We hope to raise $5 billion debt by December by means of foreign debt through medium-term notes (MTN)," SBI Chairman Pratip Chaudhury told reporters here.
Speaking on the sidelines of a meeting between Finance Minister Pranab Mukherjee and chiefs of public sector banks here, he said the debt would be raised during the second or the third quarter of this fiscal.
"Right now, we have a total objective of $5 billion, but we would like to time the market in the second and third quarters. We will be raising the funds, but there has to be visibility of credit growth. If there is demand for assets, we will go and raise it," Chaudhury said.
MTN is a kind of bond note with a maturity period usually between 5 to 10 years continually offered through various brokers, rather than issued all at once like other bonds.
The SBI chief said the bank is confident of maintaining its net interest margin (NIM), which is a measure of the return on a company's investments relative to its interest expenses, at 3.5% this fiscal.
"The margins are improving. This current fiscal we have a guidance of 3.5% (NIM) and we are slightly ahead of it. Overall guidance is 3.5% and we are on track," Chaudhury said.
He said SBI is also looking at increasing its credit growth by 16-19% in 2011-12.
Regarding recent hikes in rates, Chaudhury said: "Raising of interest rate has not impacted interest margin."
SBI had yesterday increased lending rates by 25 basis points and deposit rates by up to 100 basis points, a move that will make home, auto and other loans more expensive, but will provide better returns to savers.
The bank revised the base rate or the minimum lending rate upward by 25 basis points (bps), or 0.25%, to 9.50% with effect from July 11.
The interest rates on fixed deposits with a maturity period of 1-10 years has been fixed at 9.25%. The new deposit rates will also be effective from July 11.
The bank has also raised its benchmark prime lending rate (BPLR), which is used to determine floating interest rate loans, to 14.25% from 14%.
The decision follows the rate hike announced by the Reserve Bank in its policy review last month. Several banks, including major private lender ICICI Bank, Canara Bank and Bank of Baroda, have already raised their lending rates.
Asked about inflationary pressure, which has prompted the RBI to hike rates 10 times since March, 2010, Chaudhury said: "Inflation is continuously above 7%. So any policymaker would be worried."
